Charity Compliance Update – February 2018

It’s been a relatively quiet month regarding new consultations this month however, read on to get up to speed with updated automatic disqualification rules and revised HMRC VAT guidance around contracts versus grants.

Automatic disqualification rules

From 1 August 2018 changes to the automatic disqualification rules (for charities registered in England and Wales) mean that there will be more restrictions on who can run a charity. The Charity Commission for England and Wales published full guidance around what this means for charities on 17 January 2018, updating it on 1 February 2018.

In brief, charities have until 1 August 2018 at the latest to:

– check whether any of their trustees or senior management might be disqualified under the new rules;

– remove any such individuals from post or apply for a waiver – important to consider the implications where trustees are concerned and whether this would affect the quorate status of the board;

– get all relevant individuals to complete a fit and proper form;

– review registers at Companies House (for incorporated charities under the Companies Act) and re insolvency.

HMRC have issued updated guidance (VAT Supply and Consideration VATSC51600) to clarify the position around VAT applicability with regards to grants and contracts – a continual grey area for the sector.

HMRC say; “The principal factor to consider is if a specific supply is made to the funder or a third party in return for a payment. If so then the payment is consideration for a supply, but if this direct link is not established then the payment can be treated as outside the scope of VAT.”

The Charity Tax Group are in the process of reviewing the guidance and are expected to comment in due course.

OSCR online charitable registration – coming soon

OSCR are looking for beta testers for their online filing portal, which is currently under development. The Regulator is keen for you to get involved “whether you are someone who helps organisations apply for charitable status, have recent experience of applying for charitable status for your charity, are thinking of making an application or are just interested”.

If you are keen to get involved, email info@oscr.org.uk and put ‘Online Application Testing’ in the subject line.

It is expected that this will go live in late 2018.

Annual reporting – Northern Ireland

The requirement to file annual accounts is still relatively new for charities registered with the Charity Commission for Northern Ireland. Since the inception of new regulation in 2015, charities are required to file for accounting periods commencing on or after 1 January 2016 onwards.

The Commission reports that 1,300 of the 1,560 relevant charities met the 31 January 2018 filing deadline, whilst the 270 charities who failed to do so were automatically noted as being in default on their charity’s record.

The first two parts (A and B) invite feedback on specific issues raised by the sector in relation to complaints handling and the TPS Assured Certification. The deadline for response on these is 28th February 2018.

Part C proposes to introduce a new section to the Code for online fundraising platforms and aims to ensure that these platforms provide adequate and clear good practice guidance to individuals setting up a fundraising page on their sites.

It also aims to ensure relevant platforms follow the legal requirements set out within the recently introduced Payment Services Regulation 2017. The deadline for response on fundraising platforms is 14th March 2018.

The CTG reports that following an announcement in the 2017 Autumn Budget that the Government would legislate to reinstate the relevant elements of the Valuation Office Agency’s (VOA’s) practice prior to the decision of the Supreme Court in Woolway, DCLG has launched a consultation on business rates in multi-occupied properties.

The ruling in the above case meant that two contiguous properties in the same occupation are only assessed as one if they can be considered as a self-contained piece of property. This applies if both parts are physically accessible without having to go onto other property or through commons parts (for example, a common corridor or stairwell). There has been an adverse effect on some ratepayers, including:

increases to the overall rateable value due to the loss of “quantum discount”

loss of Small Business Rate Relief for ratepayers who have seen their property split into parts

changes to rateable value due to rounding

The ruling was potentially important for small charities and charitable companies because many of them occupy two or three rooms or floors in multi-occupied buildings and not all of them receive 100 per cent business rate relief.

The consultation was launched (on 2 January 2018) with the following scope:

how the Government should capture their policy revision intention in legislation, and

“The Commission had planned to publish an analysis of the consultation in early August. However, the high volume of submissions means it has not been possible to prepare the analysis in that timeframe. We will continue our work on the review and plan to publish our analysis later in 2017.”

Charity Tax Group (CTG):

o Review of HMRC’s Guidance on Gift Aid Donor Benefits – closed 5 January 2018. To read more around the working group terms of reference and objectives click here.

Charity Commission for Northern Ireland – Annual monitoring return 2018 – closed on 21 November 2017. Changes to apply to charities’ financial years starting on or after 1 January 2018. A full consultation report, providing an overview of the public consultation process and outlining how the Commission considered the responses they received will be available in Spring 2018.

Office of Tax Simplification (OTS) – review of depreciation and capital allowances and whether the use of accounts depreciation to provide relief for capital expenditure instead of capital allowances would simplify the preparation of tax returns for incorporated and unincorporated business. Deadline for responses was 30 November 2017. For more information about the OTS’s call for evidence see here.

OSCR will publish the final version of the guidance and an evaluation report of the consultation in early 2018.

DCLG and DWP – Funding for supported housing – two consultations were launched on 31 October 2017 and closed on 23 January 2018 – one on housing costs for sheltered and extra care accommodation, and one on housing costs for short-term supported accommodation. For policy statement and consultation documents click here. Both consultations sought views on the design of the government’s new supported housing funding models which relate to England only.